What happened

A federal judge has given Microsoft (MSFT -0.25%) the green light to close its $75 billion acquisition of Activision Blizzard (ATVI), over the objections of U.S. regulators. The ruling is sending shares of Activision up as much as 12% on Tuesday on investor anticipation that an end to the long-running saga might finally be in sight.

So what

Microsoft first agreed to acquire Activision in January 2022, offering $95 per share in cash for the video game giant that at the time was engulfed in workplace misconduct allegations. The deal would expand Microsoft's already sizable video game operation, combining its Xbox console business with games including Call of Duty, World of Warcraft, and Candy Crush.

But the deal quickly came under scrutiny of regulators, and the U.S. Federal Trade Commission (FTC) had sought an injunction to prevent the two companies from closing the deal before the FTC had a chance to challenge it.

On Tuesday, U.S. District Judge Jacqueline Scott Corley ruled that the FTC failed to show that Microsoft's ownership of Activision would hurt competition. The ruling means there is currently nothing the U.S. government can do to prevent the deal from closing.

Microsoft and Activision are still seeking approval of antitrust authorities in the United Kingdom. The U.K.'s Competition and Markets Authority on Tuesday agreed to put its court battle on hold to allow time to negotiate a potential resolution to its objections to the deal.

Now what

This drama has taken a lot of twists and turns since Microsoft first announced the deal, but the finish line has never been closer. The chances that it will end up buying Activision and shareholders will get their payday are substantially higher now than they were just 24 hours ago, and the stock is reacting accordingly.

Activision's trading price is now close enough to the deal price that there isn't much reason for new investors to jump in, but longtime investors have reason to celebrate today.